Real Earnings technical note



Explanatory Note



	The earnings series presented in this release are derived from the 
Bureau of Labor Statistics monthly establishment survey of employment, 
payroll, and hours.  The deflator used for constant-dollar earnings 
series presented in this release is derived from the Consumer Price 
Index for Urban Wage Earners and Clerical Workers (CPI-W).
	Earnings series from the monthly establishment series are estimated 
arithmetic averages (means) of the hourly and weekly earnings of all 
production or nonsupervisory jobs in the private nonfarm sector of the 
economy.  Average hourly earnings estimates are derived by dividing the 
estimated industry payroll--for all production or nonsupervisory jobs--
by the corresponding paid hours.  Average weekly hours estimates are 
similarly derived by dividing estimated aggregate hours by the 
corresponding number of production or nonsupervisory jobs.  Average 
weekly earnings estimates are derived by multiplying the average hourly 
earnings and the average weekly hours estimates.  This is equivalent to 
dividing the estimated payroll by the number of production or 
nonsupervisory jobs.  The weekly and hourly earnings estimates for 
aggregate industries, such as the major industry division and the total 
private sector averages printed in this release, are derived by summing 
the corresponding payroll, hours, and employment estimates of the 
component industries.  As a result, each industry receives a "weight" in 
the published averages that corresponds to its current level of activity 
(employment or total hours).  This further implies that fluctuations and 
varying trends in employment in high-wage versus low-wage industries as 
well as wage rate changes influence the earnings averages.
	There are several characteristics of the series presented in this 
release that limit their suitability for some types of economic 
analyses.

(1) The denominator for the weekly earnings series is the number of 
private nonfarm production or nonsupervisory worker jobs.  This number 
includes full-time and part-time jobs as well as the jobs held by 
multiple jobholders in the private nonfarm sector.  These factors tend 
to result in weekly earnings averages significantly lower than the 
corresponding numbers for full-time jobs.  (2) Annual earnings averages 
can differ significantly from the result obtained by multiplying average 
weekly earnings times 52 weeks.  The difference may be due to factors 
such as turnovers and layoffs.  (3) The series are the average earnings 
of all production or nonsupervisory jobs, not the earnings average of 
"typical" jobs or jobs held by "typical" workers.  Specifically, there 
are no adjustments for occupational, age, or schooling variations or for 
household type or location.  Many studies have established the 
significance of these factors and that their impact varies over time.
	Seasonally adjusted data (table 2) are preferred by some users for 
analyzing general earnings trends in the economy since they eliminate 
the effect of changes that normally occur at the same time and in about 
the same magnitude each year and, therefore, reveal the underlying 
trends and cyclical movements.  Changes in average earnings may be due 
to seasonal changes in the proportion of workers in high-wage and low-
wage industries or occupations or to seasonal changes in the amount of 
overtime work, and so on.
	For more information, see Thomas Gavett, "Measures of Change in Real 
Wages and Earnings," Monthly Labor Review, February 1972.
	Information in this release will be made available to sensory impaired 
individuals upon request.  Voice phone:  202-606-STAT;  TDD phone:  202-
606-5897;  TDD Message Referral Phone Number: 1-800-326-2577.

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Last Modified Date: June 11, 2020